International rating agency Fitch Ratings has affirmed Ukraine’s long-term foreign currency Issuer Default Rating (IDR) (LTFC) at ‘Restricted Default’ (RD) pending the completion of the restructuring of obligations for which Ukraine has already suspended payments or announced that it will suspend them in the future.
“Ukraine’s LTFC IDR will remain ‘RD’ until Fitch makes a determination that the exchange has been completed and normalized with a substantial majority of external commercial creditors,” the agency said in a statement on its website.
Fitch recalled that Ukraine continues the process of restructuring its external commercial debt. Following the successful completion of the Eurobond swap in September 2024, the government ordered to temporarily suspend payments on Cargill’s $0.7bn external commercial loan from September 3, 2024, Ukrenergo’s $825m state-guaranteed Eurobonds from November 9, 2024 and GDP-guarantees from May 31, 2025.
In addition, the agency affirmed the IDR on local loans of “CCC+”. “The higher local currency IDRs reflect Ukraine’s continued servicing of local currency debt as part of the ongoing external commercial debt restructuring process, which confirms our expectation of preferential treatment for local currency debt,” Fitch explained.
It pointed out that the structure of the government bond debt – only 1.3% held by non-residents with an overwhelming share held by the NBU and domestic banks, mostly state-owned – limits Ukraine’s benefits from any restructuring, as it creates potential fiscal costs (including bank recapitalization) and risks to the stability of the financial sector, hindering the development of the domestic debt market.
Fitch expects the war to continue through 2025 within the current broad parameters. “Despite some Russian territorial gains since late 2023, Western military support and strong resolve should allow Ukraine to avoid significant additional territorial losses,” the agency says.
It suggests that the new US administration’s stated goal of ending the war could lead to an agreed ceasefire, but a peace deal is unlikely due to the difficult concessions that would be required from both sides. The parameters of an agreed ceasefire, including security guarantees for Ukraine and territory that would remain under Russian control, remain uncertain, Fitch added.
It estimates that the government budget deficit will remain high at 19.1-19.2% of GDP in 2024-2025, despite recently approved tax increases, due to high defense spending and expected reductions in foreign grants. Significant fiscal consolidation will be limited by the continuation of the war as well as reconstruction costs in the event of a prolonged ceasefire, which is likely to maintain high dependence on foreign financing.
Fitch forecasts Ukraine’s debt to rise to 90.8% of GDP in 2024 from 84.4% in 2023, with 77% of external debt highly concessional and 74% denominated in USD. The agency adds that uncertainty over near-term external financing has eased as the G7 is likely to provide around $50bn in loans backed by proceeds from frozen Russian sovereign assets.
Fitch also expects the current account deficit to widen to 8.4% of GDP in 2024 and 13.6% of GDP in 2025, as capacity constraints (e.g. labor and energy) will restrain export growth. Rising consumer spending, military imports, easing currency restrictions and projected lower subsidies will outweigh the projected decline in imports of services from Ukrainians abroad, the agency added. It estimates that official financing will cover external borrowing needs, with international reserves rising to $42bn in 2024 from $40.5bn in 2023. Fitch also forecasts inflation to average 9.3% in 2025, up from 6.2% in 2024, as rapid wage growth amid labor shortages and skills mismatches could keep price pressures on domestic demand. At the same time, growth will slow to 2.9% in 2025 from 4% in 2024 due to persistent labor and energy shortages. “A durable and credible ceasefire could significantly boost the country’s growth prospects in 2025-2026,” the agency noted.
The Ukrainian leader planned to use the grand reopening of Notre-Dame Cathedral to lobby the president-elect and other world leaders attending the ceremony.
President Volodymyr Zelensky of Ukraine met with President-elect Donald J. Trump and President Emmanuel Macron of France ahead of Notre-Dame Cathedral’s grand reopening on Saturday, an event Ukraine sees as a chance to press its case to the world leaders in attendance.
Mr. Zelensky’s meeting with Mr. Trump was the first face-to-face encounter between the two since Mr. Trump won the U.S. presidential election last month.
Mr. Zelensky stepped into the Élysée Palace just after Mr. Macron met with Mr. Trump there, and the three posed for pictures ahead of a trilateral meeting.
In recent weeks, Ukrainian officials have sought to engage with Mr. Trump’s incoming administration, aiming to influence its plans for a swift end to the war with Russia in a way that aligns as much as possible with Ukraine’s interests.
These plans have so far been vague, but officials in Kyiv are concerned that Mr. Trump’s vague pledge to end the war in 24 hours could result in Russia keeping the territory it has captured and ignoring Ukraine’s demand to join NATO as a security guarantee to prevent further attacks.
Just this week, a delegation of senior Ukrainian officials and government members visited the United States and met with JD Vance, the vice president-elect; Representative Mike Waltz of Florida, Mr. Trump’s pick for national security adviser; and Keith Kellogg, Mr. Trump’s choice for envoy to Ukraine and Russia. Leading the delegation was Andriy Yermak, Mr. Zelensky’s powerful chief of staff.
Volodymyr Fesenko, a Ukrainian political analyst, said the visit’s goal was to introduce Mr. Yermak to the American officials as Ukraine’s chief negotiator, present Ukraine’s stance on future peace talks and gauge the future Trump administration’s position on the negotiations.
“What is happening now is just the first act of a prelude to the negotiations to come,” Mr. Fesenko wrote in a post on Facebook.
Ukraine’s outreach to Mr. Trump’s team has coincided with an apparent shift in Kyiv’s public stance on peace talks. After years of vowing not to cede territory to Russia, Mr. Zelensky has recently suggested he would consider doing so as a way to end the war, in return for NATO membership. Ukraine, he added, would then seek to regain its occupied territory through negotiations.
The change in position has been seen as a way for Ukraine to show Mr. Trump that it is ready to make concessions as part of negotiations.
Source: https://www.nytimes.com/2024/12/07/world/europe/zelensky-trump-macron-notre-dame.html
The state ownership policy approved by the government in late November envisages optimization of the state asset portfolio based on the results of a triage analysis of all state assets and their division into categories: those that remain in state ownership, those that will be privatized or liquidated, says First Deputy Prime Minister and Minister of Economy Yulia Sviridenko.
“The government plans to reduce the number of state-owned companies to about a hundred, instead of the more than three thousand that exist today. The purpose of this optimization is to improve the efficiency of state-owned companies, increase their contribution to the economy and reduce the state budget’s maintenance costs,” she wrote in an op-ed for Interfax-Ukraine.
Svyrydenko added that the policy defines the grounds for a company to remain in state ownership.
“This can be meeting public needs for certain services (Guaranteed Buyer), ensuring national interests (Energoatom, Ukroboronprom), ensuring an affordable price level (Ukrposhta, Ukrzaliznytsia), belonging to natural monopolies (Ukrenergo), etc.” the First Deputy Prime Minister gave examples.
According to her, the adopted document also improves the work of supervisory boards: the annexes contain a policy on remuneration of managers and members of supervisory boards, as this issue has always been sensitive to society. The maximum remuneration of a supervisory board member cannot exceed 40% of the maximum remuneration of the CEO, which is set at the market level, Svyrydenko said.
“How is this level determined? The government commissions an independent study of salaries in different sectors where companies of similar size and direction operate,” she explained.
The First Vice Prime Minister also pointed out that an important change is the emergence of waiting lists, a new document in the planning system.
“This is a tool through which the state sets specific goals for companies – expectations of profitability, liquidity and other indicators, as well as the amount of funding from the state budget and payments to the state. Waiting lists are a kind of KPIs, the failure to fulfill which may lead to the termination of powers of members of management bodies,” Svyrydenko said.
She also drew attention to an important section on the dividend policy. Clarifying that during martial law, dividends of state-owned companies account for 75% of profits, the First Deputy Prime Minister added that after the war is over, the dividend determination will take into account the funds that the company spends on important investments, such as reconstruction.
“In the future, the amount of dividends may depend on how efficiently the company uses its funds (ROE). The higher the efficiency, the less dividends will need to be paid. The value of the company’s assets, the specifics of the industry, the financial goals of the state, the proposals of the supervisory board and the company’s competitiveness in the market will also be taken into account,” Svyrydenko explained.
She reminded that after the adoption of the State Ownership Policy, the next important steps are to conduct a triage, privatize or liquidate assets unnecessary for the state, form supervisory boards in a number of state-owned companies, and separate commercial and non-commercial activities.
Global cereal production in 2024 will decline by about 0.6% from the previous year to 2,841 million tons, a downward revision since October, but still the second largest production on record, according to the monthly review of the UN Food and Agriculture Organization (FAO).
According to the report, world wheat production in 2024 will be at the level of 2023 and will amount to 789 million tons, while corn production will decline by 1.9% from the previous year to 1,271 million tons due to lower than expected yields in the European Union and the United States.
FAO’s forecast for global rice production in 2024-2025 increased by 0.8% to a record high of 538.8 million tons.
Softer wheat prices in 2025 may prevent the expansion of the area under winter wheat during the sowing campaign, which is being conducted in the Northern hemisphere. Below-normal precipitation in key wheat-growing regions in Russia resulted in low soil moisture levels, which affected planting. In contrast, favorable soil moisture and government support policies, as well as favorable prices, should encourage planting expansion in China and India.
Early signs point to a reduction in corn plantings in Argentina due to dry conditions and the risk of dwarfing disease transmitted by cicadas. In Brazil, the area under corn in 2025 will remain at last year’s level. In South Africa, white corn acreage is expected to increase. This is due to record prices and will compensate for the reduction in the area under yellow corn.
Global grain consumption is projected to increase by 0.6% to 2,859 million tons in the 2024/25 marketing year (MY, July-2024-June-2025), driven by projected growth in rice and wheat consumption as food.
According to FAO’s November forecast, global grain stocks will decrease by 0.7% from their initial level, resulting in a global grain stocks-to-consumption ratio of 30.1% in 2024/25 MY, which is lower than 30.8% in the previous year, but still indicates a “comfortable supply level” on a global scale.
International grain trade for 2024/25 MY is forecast at 484 mln tonnes, which is 4.6% less than in the previous year.
“Global wheat and corn trade volumes are expected to decline, while rice trade is expected to increase,” the report says.
In November, the National Bank of Ukraine (NBU) fined state-owned PrivatBank, Alliance Bank and Asvobank (all based in Kyiv) for violating the anti-money laundering laws for a total of UAH 27.5 million, according to a press release from the regulator. According to the release, Privat was fined UAH 10 million, Alliance – UAH 15.1 million, and Asvibank – UAH 2.5 million.
As reported with reference to market participants, Ukrainian banks are planning to sign a joint memorandum next week, which provides for the introduction of unified market practices and approaches to customer due diligence and monitoring of financial transactions on customer accounts.
According to them, the memorandum is expected to provide for a gradual reduction of the monthly transaction limit, after which, in the absence of verified income, enhanced financial monitoring will be carried out.
